Fitch Upgrades India's FY26 GDP Forecast On Strong Demand

Fitch Ratings raised its forecast for India’s GDP growth in the fiscal 2025-26 to 6.9% from 6.5%, citing robust domestic demand. The agency expects strong consumer spending and looser financial conditions to support investment.

The ratings firm said it sees inflation rising to 3.2% by the end of 2025 and 4.1% by the close of 2026. It projects GDP growth to slow to 6.3% and 6.2% in the two fiscals respectively.

Fitch added that recent goods and services tax reforms are likely to modestly boost consumption in the current fiscal and beyond. Domestic demand will remain the key driver of growth, supported by household spending.

On monetary policy, Fitch expects the Reserve Bank of India to cut the repo rate by 25 basis points towards the end of this year. It forecasts the central bank will begin raising rates again in 2027 as inflationary pressures return.